Socio-Economic Rights and Accountability Project (SERAP) has urged the World Bank President, Mr Ajay Banga, “to promptly, transparently and effectively conduct investigation into spending of loans and other facilities by the country’s 36 state governors and to suspend any loans and funding if there is relevant admissible evidence of mismanagement or diversion of public funds by any of the states”.
SERAP also urged the bank to “suspend further applications for loans and any other funding to the 36 states until these states are able to satisfactorily explain details of spending of loans and other facilities obtained from the Bank and its partners”.
This is coming as many of the country’s 36 states are alleged to be mismanaging public funds that may include loans obtained from the bank and its partners, and allocations from the Federal Government, which may also include loans obtained from the bank.
SERAP, in a letter dated 25 November 2023 and signed by its Deputy Director, Kolawole Oluwadare, said the World Bank and its partners cannot continue to give loans and other funding to states where there are credible allegations of mismanagement or diversion of public funds.
“We are concerned that there is a significant risk of mismanagement or diversion of funds linked to the Bank’s investments in many of the country’s 36 states. It is neither appropriate nor responsible lending to give loans to these states only for the loans to be misspent,” SERAP said.
“The World Bank’s lending, and support for these states may create the impression of complicity in the allegations of mismanagement or diversion of public funds by the states which may include loans from the Bank and its partners, and federal allocations.
“We would consider the option of pursuing legal action should the World Bank fail or fail to implement the recommendations contained in this letter, and we may join the country’s 36 states in any such suit,” the organisation said.
Quoting Nigeria’s Debt Management Office, SERAP said a total public debt portfolio for the country’s 36 states and the Federal Capital Territory is N9.17 trillion, while the Federal Government’s total public debt portfolio is N78.2 trillion.
It urged the World Bank to demand expressed commitment from Nigeria’s 36 governors to address credible allegations of mismanagement or diversion of public funds in their states and provide guarantees that loans and funding from the bank and its partners would not be used to fund the luxurious lifestyles of politicians.
“SERAP urges the Bank to send independent monitors to the 36 states to monitor the spending of the loans and other funding obtained from the Bank and its partners to remove the risks of mismanagement or diversion of public funds by these states,” it said.
SERAP said the World Bank currently has a portfolio of about $8.5 billion spread across the country and has also approved several loans and other funding facilities to the country’s 36 states including the recent $750 million credit line meant to the states carry out reforms to attract investment and create jobs.
“The accounts of Nigeria’s 36 states are generally not open to public scrutiny as many of them continue to refuse freedom of information requests seeking transparency and accountability in the spending of public funds.
“The World Bank and its partners need to make clear to Nigeria’s state governors that it would not tolerate any mismanagement or diversion of public funds by immediately suspending any pending loans and other funding to them until the allegations of mismanagement or diversion of public funds are investigated.
“The Bank has a legal responsibility to ensure that suspected perpetrators are brought to justice, and that any mismanaged or diverted public funds are returned to the treasuries of the states.
“The World Bank has the legal obligations to observe and promote compliance with the Nigerian Constitution 1999 [as amended] and domestic laws including the Fiscal Responsibility Act of 2007,” SERAP said.